Gold and Oil Markets Report – 28 Jan 2013

The US Dollar Index (USDX) weakened on Friday after European Central Bank (ECB) said the borrowing banks will pay back more than forecast in coming week, hence spiking the Euro value. WTI Crude prices have been remaining strong throughout whole week and looks set to climb higher. The yellow metal dropped in prices while reacting to stronger USD/JPY trend. Thus, we foresee a diversified trend between Gold and Crude in near future that may distort market correlation.

Crude Oil

WTI Crude prices traded inside the range from 94.00 – 97.00 levels last week. We reckon the market might skip higher to 100.00 benchmarks in coming week if US dollar continues to recede or the crude inventories reduce. On the other hand, draw down may test 92.50 regions as our major supports in case profit-taking kicks into market.

Gold

Gold prices fell in stricken trend as USD/JPY continued to make new high last week in the past 2-1/2-year record. The market dropped about USD40 from the intra-week high at 1696.00 levels. The trend failed to recover on Friday after US new home sales declined in December and disappointed the market buyers. This week, we expect to see some bargain-hunting at 1650.00 regions while technical consolidation may perform at 1675.00 areas if short-covering occurs.

Silver

Silver prices fell off last week’s high 32.469 and closed at 31.169 for the weekend. This week, we are expecting the support to emerge at S1 – 31.000 and S2 – 30.40 levels if bearish sentiment persists. However, it the market is well supported at S1 – 31.000 without piercing beneath here, we reckon consolidation will begin with sideway trend probably moving back to 32.000 areas.

Crude Palm Oil

Crude Palm Oil Futures (FCPO) on Bursa Derivatives closed higher on weekly basis due to stronger demand on commodity aligning to improvement on U.S and European data. The April delivery contract closed at 2445 with the total volume contracts traded approximately 35,000 lots. This week, we foresee the market might trade slightly higher at 2520 but downside potential is still open if profit-taking occurs. Support emerges at 2380 levels.

Wong is founder and principal consultant of PWForex.com and holds a professional qualification in NASD series 3 and 5 approved by National Futures Association (USA). He was previously attached with Bankers Trust Futures Inc, Barclays ZW Futures and Smith Barney Shearson (Citigroup) Inc.

He is also an active trader and author of 8 Ways to Invest In China’s Emerging Markets. Wong is also columnist for The Star, The Borneo Post in East Malaysia, The Busy Weekly, The Trader’s Journal, The Forex Journal, The Pulses, The Analysts and Capital Asia magazine.

He is a regular speaker on trading topics as well as Master Speaker for the annual Asia Traders and Investors Convention (ATIC).

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